DOCTORS' MEDICARE PAYOUTS TO BE CUT 21 PERCENT JUNE 1

May 25, 2010

For the fourth time this year, doctors face a potential huge cut in the fees that the government pays them to treat Medicare patients.

Physicians will be hit with a 21 percent cut in Medicare reimbursements as of June 1 unless lawmakers decide to patch over the issue -- as they've done for years. Congress is now debating the matter, and to stop the cut lawmakers would have to vote to pass a new patch sometime in the next two weeks, says CNNMoney.com.

If the proposed cuts go through, physicians are worried their practices will be so strapped that they'll have to drop some of the 43 million Americans who are covered under Medicare.

But, of course, on the other side of the issue is cost to the government at a time when the federal budget is tight.

"The current formula is absolutely broken," said James Rohack, president of the American Medical Association (AMA). "Congress is in a hole, and instead of climbing out they keep digging deeper."

Federal law currently requires that the payment rates for doctors who accept Medicare be adjusted annually based on a formula that's tied to the health of the economy.

That formula was established in 1997, and the law says rates should be cut every year to keep Medicare in the black.

But Congress has blocked those cuts in seven of the last eight years, setting up nine temporary patches often referred to as the "doc fix" -- three of which were in 2010 alone.

Of course, delaying cuts merely kicks an existing problem down the road.

One possible outcome of the congressional wrangling is a five year delay in the 21 percent cut in Medicare fees.

That option, the most discussed so far, would cost about $80 billion.

That spending would be exempt from a "pay-as-you-go" law enacted in February that requires lawmakers to find ways to offset certain spending increases or tax cuts.

Other options include delaying cuts by a fewer number of years, but at higher reimbursement rates, provided that the cost is capped at $80 billion.

But the AMA's Rohack says he wants "a new formula that actually reflects the true cost of care." Lawmakers counter that repealing the current setup would cost $210 billion over 10 years.